What Happened:
Shares of database as a service company Couchbase (NASDAQ: BASE) jumped 17.9% in the pre-market session after the company reported fourth results that blew past analysts' total revenue, ARR (annual recurring revenue), and EPS estimates this quarter as it generated more subscription revenue than expected. Next quarter's revenue guidance was also higher than Wall Street's estimates, though its full-year outlook was in line.
Overall, this was a really good quarter that should please shareholders, especially with the broader software sector showing choppy full-year 2024 guidance. After the initial pop the shares cooled down to $27.76, up 3.3% from previous close.
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What is the market telling us:
Couchbase's shares are very volatile and over the last year have had 24 moves greater than 5%. But moves this big are very rare even for Couchbase and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 9 months ago, when the stock dropped 18.6% on the news that the company reported first quarter results that beat analysts' revenue and earnings per share estimates. However, RPO and cRPO growth decelerated meaningfully and gross margin deteriorated. The company continued to burn cash. In addition, revenue and operating loss guidance for the next quarter fell below Consensus. The full year revenue guidance was roughly inline.
Overall, it was a weak quarter for the company, with the guidance clouding the outlook. Note that the week before the earnings release, SaaS database peer MongoDB reported very strong quarterly results with optimistic forward guidance. This dynamic further added to the disappointment around Couchbase's quarter, as the market was hopeful that the same tailwinds driving MDB's strength would also potentially help Couchbase.
Couchbase is up 31.4% since the beginning of the year, and at $27.76 per share it is trading close to its 52-week high of $28.76 from February 2024. Investors who bought $1,000 worth of Couchbase's shares at the IPO in July 2021 would now be looking at an investment worth $913.25.
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